The Cross-Complaint: You mean they can sue me back!?

Ah the cross-complaint. A favorite of litigators since the beginning.

California Civil Code Section 428.10 reads in pertinent part as follows: “A party against whom a cause of action has been asserted in a complaint … may file a cross-complaint … (a) against any of the parties who filed the complaint … against him[.]”

Imagine. Someone has wronged you. The other party has unequivocally breached the contract. They accepted your widgets over a period of years and paid on time. Next thing you know the economy goes through a down cycle. Suddenly, the other party stops paying on time. A few months later they stop paying altogether. Through a series of telephone calls and emails you try to work something out. The other party tells you that due to the difficult economy, their clients have become slow to pay so they just don’t have the money to pay your outstanding invoices. You try to be patient but when the payments stop altogether, you run out of patience. Finally, and often the last straw, they stop returning your calls. Enough.

You hire a lawyer. The lawyer sends a couple of demand letters. No response. Finally, your lawyer prepares and files a lawsuit. You expect an “open and shut” case. You provided the product or service. They must have been satisfied with your product or service or they would not have paid your invoices for a period of years. You have no reason to suspect otherwise. The other party never so much as suggested that they were not satisfied with your product or service. The Judge will see this is the case right? It’s an open and shut case. Just pay up already, or at least start returning my calls and let’s see if we can work something out.

What happens next? The other party files and “Answer” to your lawsuit, and files their own lawsuit against you (the abovementioned “Cross-Complaint”) alleging that it is YOU that is in breach of your contract, that your product or service is (and possibly always was) substandard, that you knew your product or service was substandard, and arguing that your lawsuit is nothing more than a poor attempt to EXTORT payment for your substandard product or service. You are bewildered and angry. How could this happen? Is this even allowed? You turn to your lawyer and wonder how this has happened to you.

Very often the Cross-Complaint is simply a tactic to make the party that filed the lawsuit feel like suddenly they have “skin in the game.” As one lawyer once put it to me … “I just wanted to put a little blood in the water.” Now, often this tactic is quite transparent. There is no evidence that supports the other side. It is an empty threat. But this tactic does teach us a good lesson.

Before you file a lawsuit, have you taken a good, long, sober look not only at your claims and evidentiary support, but at the OTHER SIDE’s potential claims and evidentiary support? If not, it is my recommendation that you do so. The time to do this is not AFTER you have filed your lawsuit, but before. Even if you decide to proceed with filing your lawsuit, it is best to assess not just the strengths of your case, but the WEAKNESSES as well. Really. It has been my experience that no matter how righteous you are feeling, and how right you know you are, rare … very rare is the case that has absolutely no downside, no weakness. An experienced lawyer knows to look at both sides of the case. Let him or her do their job. Litigation is inevitably full of surprises. Still, it is best to try to have as few surprises as possible.